Mitry v Wily & Anor [2010] NSWSC 84

New South Wales Supreme Court

CITATION : Mitry v Wily & Anor [2010] NSWSC 84

HEARING DATE(S) : 15 February 2010

JUDGMENT DATE : 15 February 2010

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Palmer J

EX TEMPORE JUDGMENT DATE : 15 February 2010

DECISION : Application allowed (granted?).

CATCHWORDS : LIQUIDATIONS – PRACTICE AND PROCEDURE – Application for leave to file Cross Claim against company in liquidation – discretionary factors relevant to granting of leave under s 471B – whether leave is given by the Court where evidence supporting Cross Claim appears to be inadmissible.

LEGISLATION CITED : Corporations Act 2001 (Cth) – s 471B

CATEGORY : Principal judgment

CASES CITED : Swaby v Lift Capital Partners Pty Ltd (in liq) (2009) 72 ACSR 627

Richard Mitry (Plaintiff) PARTIES : Andrew Hugh Jenner Wily (First Defendant) Business Australia Capital Finance Pty Ltd (Second Defendant)

FILE NUMBER(S) : SC 2010/00031832

COUNSEL : A.G. Rogers (Plaintiff) T.S. Hale SC (Defendants)

SOLICITORS : Mitry Lawyers (Plaintiff) McLachlan Chilton (Defendants)

2010/031832 Mitry v Wily

JUDGMENT – Ex tempore

15 February, 2010

1 The Plaintiff, Mr Mitry seeks the leave of the Court pursuant to s 471B of the Corporations Act 2001 (Cth) to proceed with a Cross Claim against the Second Defendant, BACF, of which the First Defendant, Mr Wily, is liquidator in proceedings which Mr Wily as liquidator has brought against Mr Mitry in the District Court. 2 In the District Court proceedings Mr Wily seeks judgment against Mr Mitry for an amount of some $378,000, being the principal and interest said to be due under a loan agreement dated 2 April 2003 between BACF as lender and Mr Mitry and his company, Saluata Pty Ltd, as borrowers. 3 By his Defence, which was filed in the District Court on 16 January 2009, Mr Mitry admits the loan agreement and that BACF has advanced certain monies to him pursuant to the loan agreement. However, he says in answer to the whole of the Statement of Claim that BACF and Mr Wily are estopped from suing for any monies under the loan agreement because of representations made to him in May 2003 and August 2005 by BACF that if he obtained new business for BACF, BACF would pay him a commission of five percent of the value of that business and would forgive any outstanding loans owed by Mr Mitry to BACF to the extent of commissions owing to him. Mr Mitry says that he did obtain new business for BACF to a total amount exceeding $10M so that his commission would be $500,000 which is greater than BACF's claim against him. His Defence, however, gives no particulars as to how the amount of his commission is made up. 4 By a Cross Claim in the District Court proceedings, filed on 19 January 2009, Mr Mitry pleads the commission agreement referred to in his Defence and says further that in early 2004 he introduced to BACF representatives of the Nauru Government resulting in BACF arranging a loan facility for the Government of approximately $6M which was settled in mid-2004. He further alleges that BACF took proceedings against the Nauru Government for recovery of the loan or amounts owing under the facility and the Government settled the proceedings for approximately $10M. 5 The Cross Claim seeks judgment against BACF for $500,000. Apparently by inadvertence, Mr Mitry has not obtained the leave of this Court under s 471B of the Corporations Act to prosecute the Cross Claim in the District Court. The District Court proceedings, including the Cross Claim, have been fixed for trial tomorrow for three days. Mr Mitry now seeks leave under s 471B. 6 Mr Hale SC, who appears for Mr Wily and BACF, opposes the granting of leave. He says, first, the granting of leave is futile as Mr Mitry's claim is hopeless and bound to fail; second, leave should be refused because the appropriate way for Mr Mitry to proceed is to lodge a proof of debt, which he has not yet done. He says that the liquidator should be spared the expense of litigating the Cross Claim at this stage. 7 In support of his submission that Mr Mitry's Cross Claim is hopeless, Mr Hale says that there is no admissible evidence in the District Court proceedings that BACF ever made a loan, or made a facility available, to the Nauru Government. There is no loan agreement or facility agreement and the liquidator says that he can find no document in BACF's records as to the making of any such loan or facility. 8 There is a considerable volume of correspondence in evidence which shows that BACF was in negotiation with the Nauru Phosphate Royalties Trust in late 2003 for the provision of a finance facility. There is correspondence about the facility with the Nauru Minister for Economic Development. There is reference to discussion with the then Prime Minister of Nauru about the transaction. Exactly what happened between BACF, the Phosphate Royalties Trust and various Ministers of the Nauru Government is very murky indeed. In fact, it was the subject of considerable press report in 2004. I do not need to go into detail. It is sufficient to observe that whether a finance facility or loan was made available to the Phosphate Royalties Trust by or through BACF, and whether what was arranged was a result of Mr Mitry's efforts, require findings of fact which will depend very much on the credit of witnesses. 9 It will also be an issue for determination by the District Court whether Mr Mitry's efforts, if any, fall within the terms of an Introducer's Agreement entered into between himself and BACF where under he claims five percent commission. 10 Mr Hale lays heavy emphasis on the fact that none of the evidence so far adduced by Mr Mitry in the District Court proceedings as to the making of any loan or facility by BACF to the Nauru Government or the Phosphate Royalties Trust is admissible. The evidence in that regard from Mr Mitry is, he says correctly, pure hearsay. 11 There is an affidavit from Mr Dimaris, a former Director and Secretary of BACF, to the effect that BACF, "… successfully organised a loan facility in the amount of $7.1 to the Republic of Nauru." 12 But Mr Hale says, again correctly, this statement is no more than summary and conclusion without any supporting detail and it would be rejected as inadmissible. 13 Mr Rogers of Counsel, who appears for Mr Mitry, has assured the Court that no new evidence will be adduced by him in the District Court proceedings which are to start tomorrow. When confronted with the inadmissibility of Mr Dimaris' evidence, Mr Rogers foreshadowed an application to the District Court to adduce evidence from Mr Dimaris on that particular issue in admissible form. He said, with commendable frankness, that if that leave were granted he did not presently know what Mr Dimaris' oral evidence would be. 14 The fact that affidavit evidence on a critical issue, now tendered in support of Mr Mitry's application for leave to proceed with the Cross Claim, would be inadmissible in the District Court proceedings at a final hearing does not necessarily mean that the Cross Claim is doomed to failure in the District Court. This Court is not to try the Cross Claim. Its function in this application is to determine whether the Cross Claim is at least arguable. 15 I hold that the Cross Claim is arguable. There is evidence of the Introducer's Agreement upon which Mr Mitry relies. There is evidence to support, on a prima facie basis, the assertion that Mr Mitry introduced BACF to officials of the Nauru Government and of the Phosphate Royalties Trust and that some facility or loan was made available to the Trust. It remains to be seen whether, through admissions in cross examination or otherwise, Mr Mitry will be able to establish the facts upon which he relies to support his Cross Claim. 16 I turn now to the discretionary factors relevant to the granting of leave under s 471B. They are admirably summarised by Gilmore J in Swaby v Lift Capital Partners Pty Ltd (in liq) (2009) 72 ACSR 627 commencing at [26] and especially at [29], as follows: "The factors to be taken into account … have been held to include: